“We posted solid operating results for Q3 highlighted by ongoing progress in our cloud transition and the strengthening of our Global Services business,” said Manhattan Associates president and CEO Eddie Capel. “Q3 total revenue and earnings per share performance improved over Q2 in line with expectations and we expect to exit 2018 stronger than we entered the year. Based on our outlook for the remainder of the year, we are raising our 2018 full-year earnings guidance and are narrowing the range of our full-year total revenue estimate.”

“While cautious regarding global geopolitical and economic volatility, we continue to be very bullish on the market opportunity ahead with supply chain complexity and retail evolution in our target markets bringing continued need for our solutions among our customers. Customer feedback and win rates are strong, and our product advancements are enabling our clients to Push Possible® with their commerce supply chains,” added Mr. Capel.

THIRD QUARTER 2018 FINANCIAL SUMMARY:

We have reclassified certain line items in prior period financial statements to conform to the current period presentation in the consolidated statements of income because of our business transition to cloud subscriptions.

GAAP diluted earnings per share was $0.43 in Q3 2018 compared to $0.47 in Q3 2017.

Adjusted diluted earnings per share, a non-GAAP measure, was $0.49 in Q3 2018, compared to $0.51 in Q3 2017.

Consolidated total revenue was $142.4 million in Q3 2018, compared to $152.9 million in Q3 2017. License revenue was $11.5 million in Q3 2018, compared to $16.3 million in Q3 2017. Cloud subscription revenue was $6.5 million in Q3 2018, compared to $2.5 million in Q3 2017.

GAAP operating income was $36.1 million in Q3 2018, compared to $51.1 million in Q3 2017.

Adjusted operating income, a non-GAAP measure, was $41.5 million in Q3 2018, compared to $54.9 million in Q3 2017.

Cash flow from operations was $35.2 million in Q3 2018, compared to $44.0 million in Q3 2017. Days Sales Outstanding was 60 days at September 30, 2018, compared to 64 days at June 30, 2018.

Cash and investments totaled $93.9 million at September 30, 2018, compared to $83.4 million at June 30, 2018.

During the three months ended September 30, 2018, the Company repurchased 388,562 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors for a total investment of $20.7 million. In October 2018, our Board authorized the Company to repurchase up to an aggregate of $50 million of the Company’s common stock.

NINE MONTH 2018 FINANCIAL SUMMARY:

We have reclassified certain line items in prior period financial statements to conform to the current period presentation in the consolidated statements of income because of our business transition to cloud subscriptions.

GAAP diluted earnings per share for the nine months ended September 30, 2018, was $1.18, compared to $1.32 for the nine months ended September 30, 2017.

Adjusted diluted earnings per share, a non-GAAP measure, was $1.33 for the nine months ended September 30, 2018, compared to $1.42 for the nine months ended September 30, 2017.

Consolidated revenue for the nine months ended September 30, 2018, was $414.8 million, compared to $450.5 million for the nine months ended September 30, 2017. License revenue was $32.1 million for the nine months ended September 30, 2018, compared to $57.6 million for the nine months ended September 30, 2017. Cloud subscription revenue was $16.3 million for the nine months ended September 30, 2018, compared to $6.4 million for the nine months ended September 30, 2017.

GAAP operating income was $99.6 million for the nine months ended September 30, 2018, compared to $142.1 million for the nine months ended September 30, 2017.

Adjusted operating income, a non-GAAP measure, was $114.5 million for the nine months ended September 30, 2018, compared to $156.4 million for the nine months ended September 30, 2017.

Cash flow from operations was $103.3 million in the nine months ended September 30, 2018, compared to $116.6 million in the nine months ended September 30, 2017.

During the nine months ended September 30, 2018, the Company repurchased 2,628,918 shares of Manhattan Associates common stock under the share repurchase program authorized by our Board of Directors, for a total investment of $118.5 million.

NEW PRESENTATION OF CONSOLIDATED STATEMENTS OF INCOME

We have reclassified certain line items in prior period financial statements to conform to the current period presentation in the consolidated statements of income because of our business transition to cloud subscriptions. These reclassifications include: all revenue line items; cost of license; cost of cloud subscriptions, maintenance and services; and cost of hardware. These reclassifications did not affect total revenue, operating income or net income. For further detail, please see note 7 in the supplemental financial information accompanying this press release.

2018 GUIDANCE

Manhattan Associates provides the following updated revenue, operating margin and diluted earnings per share guidance for the full year 2018:

Guidance Range - 2018 Full Year

($'s in millions, except operating margin and EPS)

$ Range

% Growth Range

Total revenue - current guidance

$

552

$

555

-7

%

-7

%

Total revenue - previous guidance

$

548

$

560

-8

%

-6

%

Operating Margin:

GAAP operating margin - current guidance

22.6

%

22.9

%

Equity-based compensation

3.7

%

3.6

%

Adjusted operating margin(1) - current guidance

26.3

%

26.5

%

GAAP operating margin - previous guidance

21.1

%

21.4

%

Equity-based compensation

3.7

%

3.6

%

Adjusted operating margin(1) - previous guidance

24.8

%

25.0

%

Diluted earnings per share (EPS):

GAAP EPS - current guidance

$

1.48

$

1.50

-12

%

-11

%

Equity-based compensation, net of tax

0.21

0.21

Adjusted EPS(1) - current guidance

$

1.69

$

1.71

-10

%

-9

%

GAAP EPS - previous guidance

$

1.32

$

1.36

-21

%

-19

%

Equity-based compensation, net of tax

0.25

0.25

Adjusted EPS(1) - previous guidance

$

1.57

$

1.61

-16

%

-14

%

(1) Adjusted operating margin and adjusted EPS are non-GAAP measures that exclude the impact of equity-based compensation and acquisition-related costs, and the related income tax effects of these items if applicable.

Manhattan Associates currently intends to publish in each quarterly earnings release certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. Those statements, including the guidance provided above, do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release.

Manhattan Associates will make its earnings release and published expectations available on its website (www.manh.com). Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance above, should be considered historical only, and Manhattan Associates disclaims any obligation to update them.

CONFERENCE CALL

The Company’s conference call regarding its third quarter financial results will be held today, October 23, 2018, at 4:30 p.m. Eastern Time. We invite investors to a live webcast of the conference call through the Investor Relations section of Manhattan Associates' website at www.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software.

Those who cannot listen to the live broadcast may access a replay shortly after the call by dialing +1.855.859.2056 in the U.S. and Canada, or +1.404.537.3406 outside the U.S., and entering the conference identification number ­­­­­­­­5088866 or via the web at www.manh.com. The phone replay will be available for two weeks after the call, and the Internet webcast will be available until Manhattan Associates’ fourth quarter 2018 earnings release.

GAAP VERSUS NON-GAAP PRESENTATION

The Company provides adjusted operating income and margin, adjusted income tax provision, adjusted net income, adjusted diluted earnings per share, adjusted cost of services, and adjusted cost of cloud subscriptions, maintenance and services in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with – or alternatives to – GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The Company believes the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the three and nine months ended September 30, 2018.

Non-GAAP adjusted operating income and margin, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation, acquisition-related costs and the amortization of these costs, and a restructuring charge – all net of income tax effects, and the impact of the Tax Cuts and Jobs Act. Adjusted cost of services and adjusted cost of cloud subscriptions, maintenance and services exclude the impact of equity-based compensation. We include reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments in the supplemental information attached to this release.

Manhattan Associates designs, builds and delivers leading edge cloud and on-premise solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com.

This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release include, without limitation, the information set forth under “2018 Guidance,” statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate,” and similar expressions. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: uncertainty about the global economy, risks related from transitioning our business from a traditional perpetual license software company (generally hosted by our customers on their own premises and equipment) to a subscription-based software-as-a service/cloud-based model, disruption in the retail sector, the possible effect of new U.S. tariffs on imports from other countries (and possible responsive tariffs on U.S. exports by other countries) on international commerce, delays in product development, competitive pressures, software errors, information security breaches and the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and in Item 1A of Part II in subsequent Quarterly Reports on Form 10-Q. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenue:

Software license

$

11,526

$

16,260

$

32,054

$

57,601

Cloud subscriptions

6,455

2,534

16,301

6,408

Maintenance

37,177

36,338

110,567

105,673

Services

84,136

84,211

245,160

249,319

Hardware

3,057

13,540

10,709

31,512

Total revenue

142,351

152,883

414,791

450,513

Costs and expenses:

Cost of license

1,211

1,316

4,615

4,106

Cost of cloud subscriptions, maintenance and services

59,975

51,103

173,446

159,111

Cost of hardware

-

10,653

-

23,789

Research and development

18,453

14,747

53,688

43,074

Sales and marketing

10,726

10,739

37,419

34,260

General and administrative

13,711

11,031

39,396

34,290

Depreciation and amortization

2,179

2,275

6,616

6,863

Restructuring charge

-

(77

)

-

2,945

Total costs and expenses

106,255

101,787

315,180

308,438

Operating income

36,096

51,096

99,611

142,075

Other income (loss), net

1,538

207

3,245

(232

)

Income before income taxes

37,634

51,303

102,856

141,843

Income tax provision

9,179

18,704

24,081

49,876

Net income

$

28,455

$

32,599

$

78,775

$

91,967

Basic earnings per share

$

0.43

$

0.47

$

1.18

$

1.33

Diluted earnings per share

$

0.43

$

0.47

$

1.18

$

1.32

Weighted average number of shares:

Basic

65,658

68,928

66,539

69,389

Diluted

65,901

69,135

66,717

69,614

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Reconciliation of Selected GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

Operating income

$

36,096

$

51,096

$

99,611

$

142,075

Equity-based compensation (a)

5,303

3,773

14,573

11,041

Purchase amortization (c)

107

108

322

323

Restructuring charge (d)

-

(77

)

-

2,945

Adjusted operating income (Non-GAAP)

$

41,506

$

54,900

$

114,506

$

156,384

Income tax provision

$

9,179

$

18,704

$

24,081

$

49,876

Equity-based compensation (a)

1,299

1,377

3,570

4,030

Tax benefit of stock awards vested (b)

41

22

771

1,897

Purchase amortization (c)

26

40

79

118

Restructuring charge (d)

-

(28

)

-

1,075

U.S. Tax Cuts and Jobs Act impact (e)

-

-

348

-

Adjusted income tax provision (Non-GAAP)

$

10,545

$

20,115

$

28,849

$

56,996

Net income

$

28,455

$

32,599

$

78,775

$

91,967

Equity-based compensation (a)

4,004

2,396

11,003

7,011

Tax benefit of stock awards vested (b)

(41

)

(22

)

(771

)

(1,897

)

Purchase amortization (c)

81

68

243

205

Restructuring charge (d)

-

(49

)

-

1,870

U.S. Tax Cuts and Jobs Act impact (e)

-

-

(348

)

-

Adjusted net income (Non-GAAP)

$

32,499

$

34,992

$

88,902

$

99,156

-

Diluted EPS

$

0.43

$

0.47

$

1.18

$

1.32

Equity-based compensation (a)

0.06

0.03

0.16

0.10

Tax benefit of stock awards vested (b)

-

-

(0.01

)

(0.03

)

Purchase amortization (c)

-

-

-

-

Restructuring charge (d)

-

-

-

0.03

U.S. Tax Cuts and Jobs Act impact (e)

-

-

(0.01

)

-

Adjusted diluted EPS (Non-GAAP)

$

0.49

$

0.51

$

1.33

$

1.42

Fully diluted shares

65,901

69,135

66,717

69,614

(a) Adjusted results exclude all equity-based compensation, to facilitate comparison with our peers and for the other reasons explained in our Current Report on Form 8-K filed today with the SEC on the date hereof. Equity-based compensation is included in the following GAAP operating expense lines for the three and nine months ended September 30, 2018, and 2017:

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

Cost of services

$

1,531

$

875

$

4,204

$

2,596

Research and development

1,074

774

3,135

1,928

Sales and marketing

591

490

1,496

1,550

General and administrative

2,107

1,634

5,738

4,967

Total equity-based compensation

$

5,303

$

3,773

$

14,573

$

11,041

(b) Adjustments represent the excess tax benefits and tax deficiencies of the stock awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible for an award of equity instruments on our tax return is more (less) than the cumulative compensation cost recognized for financial reporting purposes. As discussed above, we excluded equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other reasons explained in our Current Report on Form 8-K filed with the SEC. Therefore, we also excluded the related tax benefit (expense) generated upon their vesting.

(c) Adjustments represent purchased intangibles amortization from a prior acquisition. We exclude that amortization from adjusted results to facilitate comparison with our peers, to facilitate comparisons of the results of our core operations from period to period and for the other reasons explained in our Current Report on Form 8-K filed with the SEC.

(d) In May 2017, we eliminated about 100 positions due to retail sector headwinds and to align our services capacity with demand. That action did not impair or alter our strategic investment plans in innovation and sales and marketing to increase market share and extend our competitive advantage. As a result of that initiative, we recorded a charge of approximately $3.0 million in the second quarter of 2017. The charge primarily consisted of employee severance, employee transition and outplacement costs. We excluded that charge from adjusted non-GAAP results because we do not believe the charge was a cost resulting from normal operating activities and for the other reasons explained in our Current Report on Form 8-K filed with the SEC.

(e) In the fourth quarter of 2017, we recorded a provisional net one-time tax of $2.8 million because of the enactment of the Tax Cuts and Jobs Act in December 2017. We calculated that amount based on a reasonable estimate of the income tax effects, primarily from a tax on accumulated foreign earnings and the remeasurement of deferred tax assets. We adjusted our provisional estimate by $0.3 million during the nine months ended September 30, 2018.

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

September 30, 2018

December 31, 2017

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

89,749

$

125,522

Short-term investments

4,148

-

Accounts receivable, net of allowance of $2,792 and $2,692, respectively

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

6,616

6,863

Equity-based compensation

14,573

11,041

Loss on disposal of equipment

56

34

Deferred income taxes

(244

)

741

Unrealized foreign currency (gain) loss

(1,373

)

93

Changes in operating assets and liabilities:

Accounts receivable, net

(1,995

)

5,095

Other assets

(5,296

)

(940

)

Accounts payable, accrued and other liabilities

11,059

(2,273

)

Income taxes

(7,488

)

(2,151

)

Deferred revenue

8,635

6,169

Net cash provided by operating activities

103,318

116,639

Investing activities:

Purchase of property and equipment

(5,536

)

(3,897

)

Net purchases of investments

(5,196

)

(4,487

)

Net cash used in investing activities

(10,732

)

(8,384

)

Financing activities:

Purchase of common stock

(124,558

)

(81,700

)

Net cash used in financing activities

(124,558

)

(81,700

)

Foreign currency impact on cash

(3,801

)

2,648

Net change in cash and cash equivalents

(35,773

)

29,203

Cash and cash equivalents at beginning of period

125,522

95,615

Cash and cash equivalents at end of period

$

89,749

$

124,818

MANHATTAN ASSOCIATES, INC.SUPPLEMENTAL INFORMATION

1. GAAP and Adjusted earnings per share by quarter are as follows:

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

YTD

GAAP Diluted EPS

$

0.40

$

0.45

$

0.47

$

0.36

$

1.68

$

0.33

$

0.42

$

0.43

$

1.18

Adjustments to GAAP:

Equity-based compensation

0.04

0.03

0.03

0.05

0.15

0.05

0.06

0.06

0.16

Tax benefit of stock awards vested

(0.03

)

-

-

-

(0.03

)

(0.01

)

-

-

(0.01

)

Purchase amortization

-

-

-

-

-

-

-

-

-

Restructuring charge

-

0.03

-

-

0.03

-

-

-

-

U.S. Tax Cuts and Jobs Act impact

-

-

-

0.04

0.04

(0.01

)

-

-

(0.01

)

Adjusted Diluted EPS

$

0.42

$

0.50

$

0.51

$

0.45

$

1.87

$

0.37

$

0.47

$

0.49

$

1.33

Fully Diluted Shares

70,247

69,421

69,135

68,791

69,424

67,736

66,535

65,901

66,717

2. Revenues and operating income by reportable segment are as follows (in thousands):

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

YTD

Revenue:

Americas

$

113,115

$

123,658

$

124,833

$

115,543

$

477,149

$

104,615

$

112,945

$

113,886

$

331,446

EMEA

23,360

22,028

18,453

21,508

85,349

19,164

21,356

21,181

61,701

APAC

7,014

8,455

9,597

7,035

32,101

6,790

7,570

7,284

21,644

$

143,489

$

154,141

$

152,883

$

144,086

$

594,599

$

130,569

$

141,871

$

142,351

$

414,791

GAAP Operating Income:

Americas

$

28,713

$

35,717

$

39,295

$

32,968

$

136,693

$

20,318

$

26,589

$

26,200

$

73,107

EMEA

10,754

9,995

7,128

7,952

35,829

5,475

6,252

7,413

19,140

APAC

2,253

3,547

4,673

2,650

13,123

2,037

2,844

2,483

7,364

$

41,720

$

49,259

$

51,096

$

43,570

$

185,645

$

27,830

$

35,685

$

36,096

$

99,611

Adjustments (pre-tax):

Americas:

Equity-based compensation

$

4,472

$

2,796

$

3,773

$

5,188

$

16,229

$

4,343

$

4,927

$

5,303

$

14,573

Purchase amortization

107

108

108

107

430

107

108

107

322

Restructuring charge

-

2,908

(77

)

(18

)

2,813

-

-

-

-

$

4,579

$

5,812

$

3,804

$

5,277

$

19,472

$

4,450

$

5,035

$

5,410

$

14,895

EMEA:

Restructuring charge

-

114

-

(6

)

108

-

-

-

-

Adjusted non-GAAP Operating Income:

Americas

$

33,292

$

41,529

$

43,099

$

38,245

$

156,165

$

24,768

$

31,624

$

31,610

$

88,002

EMEA

10,754

10,109

7,128

7,946

35,937

5,475

6,252

7,413

19,140

APAC

2,253

3,547

4,673

2,650

13,123

2,037

2,844

2,483

7,364

$

46,299

$

55,185

$

54,900

$

48,841

$

205,225

$

32,280

$

40,720

$

41,506

$

114,506

3. Impact of Currency Fluctuation

The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands):

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

YTD

Revenue

$

(1,547

)

$

(1,219

)

$

536

$

1,820

$

(410

)

$

2,781

$

1,699

$

(581

)

$

3,899

Costs and expenses

(789

)

(396

)

723

1,485

1,023

2,328

831

(1,177

)

1,982

Operating income

(758

)

(823

)

(187

)

335

(1,433

)

453

868

596

1,917

Foreign currency (losses) gains in other income

(646

)

(348

)

(81

)

(771

)

(1,846

)

366

705

1,431

2,502

$

(1,404

)

$

(1,171

)

$

(268

)

$

(436

)

$

(3,279

)

$

819

$

1,573

$

2,027

$

4,419

Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

YTD

Operating income

$

(70

)

$

(326

)

$

(338

)

$

(345

)

$

(1,079

)

$

(360

)

$

359

$

828

$

827

Foreign currency (losses) gains in other income

(320

)

(190

)

71

(43

)

(482

)

210

1,120

1,572

2,902

Total impact of changes in the Indian Rupee

$

(390

)

$

(516

)

$

(267

)

$

(388

)

$

(1,561

)

$

(150

)

$

1,479

$

2,400

$

3,729

4. Other income includes the following components (in thousands):

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

YTD

Interest income

$

293

$

264

$

314

$

303

$

1,174

$

347

$

241

$

201

$

789

Foreign currency (losses) gains

(646

)

(348

)

(81

)

(771

)

(1,846

)

366

705

1,431

2,502

Other non-operating (expense) income

(18

)

16

(26

)

(112

)

(140

)

8

40

(94

)

(46

)

Total other (loss) income

$

(371

)

$

(68

)

$

207

$

(580

)

$

(812

)

$

721

$

986

$

1,538

$

3,245

5. Capital expenditures are as follows (in thousands):

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

YTD

Capital expenditures

$

789

$

1,914

$

1,194

$

2,302

$

6,199

$

2,174

$

1,881

$

1,481

$

5,536

6. Stock Repurchase Activity (in thousands):

2017

2018

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

YTD

Shares purchased under publicly-announced buy-back program

1,004

535

-

1,156

2,695

1,158

1,082

389

2,629

Shares withheld for taxes due upon vesting of restricted stock

131

1

2

1

135

111

1

3

115

Total shares purchased

1,135

536

2

1,157

2,830

1,269

1,083

392

2,744

Total cash paid for shares purchased under publicly-announced buy-back program

$

49,978

$

24,974

$

-

$

49,953

$

124,905

$

49,972

$

47,876

$

20,669

$

118,517

Total cash paid for shares withheld for taxes due upon vesting of restricted stock

6,641

27

80

54

6,802

5,843

23

175

6,041

Total cash paid for shares repurchased

$

56,619

$

25,001

$

80

$

50,007

$

131,707

$

55,815

$

47,899

$

20,844

$

124,558

7. Impact of Cloud Transition

Because of our business transition to Cloud Subscriptions, we have revised our presentations of revenue and related cost line items in our consolidated statements of income. We have reclassified certain line items in prior period financial statements to conform to the current period presentation in the consolidated statements of income. These reclassifications include: all revenue line items; cost of license; cost of cloud subscriptions, maintenance and services; and cost of hardware. These reclassifications did not affect total revenue, operating income or net income. The following table reflects the comparison between the former and new presentation (in thousands):

2016

2017

2018

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

YTD

Former Presentation:

Software license

$

84,996

$

22,773

$

22,442

$

18,794

$

17,900

$

81,909

$

12,024

$

18,350

$

17,981

$

48,355

Services

467,286

108,833

116,828

115,555

110,394

451,610

111,701

115,051

116,911

343,663

Hardware and other

52,275

11,883

14,871

18,534

15,792

61,080

6,844

8,470

7,459

22,773

$

604,557

$

143,489

$

154,141

$

152,883

$

144,086

$

594,599

$

130,569

$

141,871

$

142,351

$

414,791

Cost of license

$

10,820

$

2,240

$

2,355

$

2,830

$

3,169

$

10,594

$

3,982

$

5,534

$

5,789

$

15,305

Cost of services

197,475

49,743

47,751

44,750

43,053

185,297

50,348

49,475

50,984

150,807

Cost of hardware and other

41,584

9,638

12,207

15,492

12,505

49,842

3,464

4,072

4,413

11,949

$

249,879

$

61,621

$

62,313

$

63,072

$

58,727

$

245,733

$

57,794

$

59,081

$

61,186

$

178,061

New Presentation:

Software license

$

79,213

$

21,277

$

20,064

$

16,260

$

14,712

$

72,313

$

7,555

$

12,973

$

11,526

$

32,054

Cloud subscriptions (a)

5,783

1,496

2,378

2,534

3,188

9,596

4,469

5,377

6,455

16,301

Maintenance

133,848

33,376

35,959

36,338

37,325

142,998

36,397

36,993

37,177

110,567

Services

351,785

79,781

85,327

84,211

77,183

326,502

78,757

82,267

84,136

245,160

Hardware

33,928

7,559

10,413

13,540

11,678

43,190

3,391

4,261

3,057

10,709

$

604,557

$

143,489

$

154,141

$

152,883

$

144,086

$

594,599

$

130,569

$

141,871

$

142,351

$

414,791

Cost of license

$

6,818

$

1,352

$

1,438

$

1,316

$

1,377

$

5,483

$

1,308

$

2,096

$

1,211

$

4,615

Cost of cloud subscriptions, maintenance and services (b)

219,635

54,899

53,109

51,103

48,934

208,045

56,486

56,985

59,975

173,446

Cost of hardware

23,426

5,370

7,766

10,653

8,416

32,205

-

-

-

-

$

249,879

$

61,621

$

62,313

$

63,072

$

58,727

$

245,733

$

57,794

$

59,081

$

61,186

$

178,061

Reconciliation of GAAP to Non-GAAP Measures:

2016

2017

2018

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

YTD

Former Presentation:

Cost of services

$

197,475

$

49,743

$

47,751

$

44,750

$

43,053

$

185,297

$

50,348

$

49,475

$

50,984

$

150,807

Equity-based compensation (c)

(3,794

)

(1,141

)

(580

)

(875

)

(1,398

)

(3,994

)

(1,117

)

(1,556

)

(1,531

)

(4,204

)

Adjusted Cost of services

$

193,681

$

48,602

$

47,171

$

43,875

$

41,655

$

181,303

$

49,231

$

47,919

$

49,453

$

146,603

New Presentation:

Cost of cloud subscriptions, maintenance and services (b)

$

219,635

$

54,899

$

53,109

$

51,103

$

48,934

$

208,045

$

56,486

$

56,985

$

59,975

$

173,446

Equity-based compensation (c)

(3,794

)

(1,141

)

(580

)

(875

)

(1,398

)

(3,994

)

(1,117

)

(1,556

)

(1,531

)

(4,204

)

Adjusted Cost of cloud subscriptions, maintenance and services

$

215,841

$

53,758

$

52,529

$

50,228

$

47,536

$

204,051

$

55,369

$

55,429

$

58,444

$

169,242

(a) Cloud subscriptions includes software as a service (SaaS) and arrangements that provide customers the right to use our software within a cloud-based environment that we manage where the customer does not have the right to take possession of the software without significant penalties.

(b) Cost of cloud subscriptions, maintenance and services consists primarily of salaries and other personnel-related expenses of employees dedicated to cloud subscriptions; maintenance services; and professional and technical services as well as hosting fees.

(c) Adjusted results exclude all equity-based compensation to facilitate comparison with our competitors and peers and for the other reasons explained in our Current Report on Form 8-K filed today with the SEC.

8. ASC 606 Adoption

We adopted the new revenue recognition standard, FASB ASC Topic 606, Revenue from Contracts with Customers, in the first quarter of 2018. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects substantially all entities. We adopted the standard using the modified retrospective method with the cumulative effect of initially adopting the standard recorded as an adjustment to retained earnings as of January 1, 2018. We recorded historical hardware sales prior to the adoption of ASC 606 on a gross basis, as we were the principal in the transaction in accordance with ASC 605-45. Under the new standard, we are an agent in the transaction as we do not physically control the hardware we sell. Accordingly, we recognize our hardware revenue net of related cost, which reduces both hardware revenue and cost of sales as compared to our accounting prior to 2018. We recognize and present our hardware revenue net of related cost under the new standard prospectively. For comparison purposes only, had we implemented ASC 606 using the full retrospective method, we would have presented hardware revenue net of expense in our 2017 quarterly financial results below (in thousands):

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